M&A activity in the automotive aftermarket

Deal activity across the global aftermarket industry has been buoyant in recent years as both trade buyers and private equity investors look to establish international footprints.

Strong growth in the Asian market has been the rationale for many transactions, while the increasing average age of vehicles in more developed markets such as Europe continues to drive M&A activity.

Private equity players have in recent years invested in many of Europe’s top distributors including AAG, Rhiag and Euro Car Parts. One of the most active trade buyers has been the US LKQ group which has acquired a number of European parts distributors.

Notable trade deals

The Parts Alliance, the UK’s second largest automotive parts distributor, was acquired by Canada-based Uni-Select.

Highline Aftermarket, a US manufacturer of packaged automotive chemicals, lubricants and parts, acquired South/Win, a US manufacturer of car care products.

Sweden-based Indutrade acquired Klokkerholm Karosseridele, a Danish company which offers a wide range of spare parts to the industry. Indutrade previously acquired Professional Parts.

Tenneco, a US manufacturer of automotive ride control and emission control products and systems, acquired Federal-Mogul, a maker of powertrain components, for €4.6bn. Tenneco is looking to grow its market share in fast-growing Asian markets.

Kramp Groep, a Dutch company which distributes parts for agricultural and industrial markets, acquired Raico, an Italian supplier of replacement parts.

Alliance Automotive Group (AAG), one of the largest parts distribution platforms in Europe, made two acquisitions in the UK. It acquired Hereward Car and Truck Components, and Fast Parts Wales, a supplier of automotive parts and accessories. Genuine Parts Company acquired AAG in 2017 from PE funds managed by Blackstone and AAG’s founders.

Wessels + Müller acquired the Trost Group. Both companies sell parts through their branch networks and their customers are mainly independent garages.

Stahlgruber, a leading distributor of aftermarket spare parts, acquired PV Automotive and also Karl Ruecker. Stahlgruber was itself later acquired by US auto parts retailer LKQ for €1.5bn in 2017. That deal gave LKQ an additional strategic hub for its European operations. In recent years LKQ has expanded on the continent through acquisitions such as Euro Car Parts and Rhiag-Inter Auto Parts Italia.

To drive more competition in the spare parts market, since 2011 the industry across the EU has been subject to regulations under which OEMs may not hinder their suppliers from also supplying their products as spare parts to independent distributors.